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Insuring State Receives its Share of Oil Lease Revenues

Column by Sen. Trent Lott   Filed 3/17/06   GCN

  For several years I’ve led an effort, along with my Congressional counterparts in Louisiana, Alabama and Texas, to secure more Gulf of Mexico oil and natural gas rig lease revenues for our states and coastal communities.  I’ve recently introduced legislation that could boost Mississippi’s share of this revenue to more than $1 billion which would mean a lot as we recover from Hurricane Katrina.

 

Right now Congress is considering whether to allow more energy exploration in what is called “Lease Sale 181," a huge three-million acre swath of ocean about 123 miles southeast of Biloxi and some 100 miles south of Mobile.

 

I want to ensure that if Congress does open this area to leasing, Mississippi and our neighboring energy-producing states get our share of these leasing proceeds, instead of all this funding going straight to federal bureaucrats in Washington.

 

If enacted, this bill would be the third application of Gulf State lease revenue sharing, with the other two sharing arrangements already applying to existing Gulf lease tracts.  It’s only right that Louisiana, Alabama, Mississippi and Texas – the four Gulf states that allow offshore oil and gas exploration – receive the majority of these proceeds.  We are the states that allow rigs to be positioned off our coasts.  Our communities provide much of the support structure, the ports, pipeline facilities and fabrication facilities.  We take the risks, too. 

 

The Lease Sale 181 revenue sharing bill will require that 50 percent of federal revenues from 181 leases be shared with Gulf States, except for Florida which doesn’t allow offshore exploration.  Of the funds apportioned to the states, based on their distance from the tract, each state government would get 65 percent of its state’s share, with the remaining 35 percent going to its coastal counties, which are closest to the exploration area.  The revenue sharing arrangement would continue for the leases’ duration.

 

Like past revenue sharing bills, the Lease Sale 181 measure would allow states and local communities to use their offshore revenues for conservation, protection or restoration of coastal areas like wetlands, onshore infrastructure projects, energy production and efficiency initiatives, and even for “mitigation” measures which seek to offset, minimize or relieve any stresses caused to the environment by energy exploration.

 

In fact, these funds could even help states meet their matching requirements for other needed federal programs.  You see, though there are many federal programs to help with local and state needs, they often require local communities and states to put up a percentage of matching funds.  Often times the matching requirement dissuades local and state officials from applying for this assistance.  But my bill includes a provision that would allow states to use these revenue sharing funds to match federal government programs. This is money that can impact Mississippi from the Gulf to the Tennessee line.

 

Some may question why Mississippi should get any of these funds, when Lease Sale 181 actually lies directly off the coast of Mobile and Baldwin counties in Alabama.  The Congressional delegations in these states agree that it’s a fair arrangement because a state’s portion of this revenue is calculated based on its distance from the tract.  This is the fairest way to determine each state’s share.  This revenue sharing among the four energy-producing Gulf states has worked well in past legislation on other Gulf tracts, and it should work well again when applied to Lease Sale 181.

 

Mississippi, Alabama, Louisiana and Texas each have agreed to permit energy exploration off our coasts.  We support it.  We share the costs and the risks.  Our states now are trying to recover from the impact of hurricanes Katrina and Rita on our residents, our economy and our energy production.  Every fair-minded American understands that in this circumstance, it’s certainly fair to share


Senator Lott welcomes any questions or comments about this column. 

Write to: U.S. Senator Trent Lott, 487 Russell Senate Office Building, Washington, D.C. 20510 (Attn: Press Office) or Email: senatorlott@lott.senate.gov

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